Deducting Charitable Donations

If you itemize income tax deductions on Schedule A (form 1040), you may deduct your charitable donations. Keep in mind that not every non-profit organization is a tax-qualified charitable organization. Be sure to ask the organization whether your contribution is tax-deductible or check with the IRS. You'll want to keep good records or all your donations. Remember, you can deduct cash donations and donations of property, but you can't deduct the value of donated time and services.

• Money Donations — Receipts are required for all money donations.
• Item Donations — Give new or used goods to charity and deduct their fair market value. Special rules apply to donations of vehicles and to donations of appreciated property (property that is worth more than you paid for it).
• Volunteering — Deduct 14¢ per mile while driving for charity. You can also deduct other out-of-pocket expenses.

If you contribute to a charity and receive something in return, such as dinner, then your charitable deduction is the amount you paid or the value of the property you donated minus the value of the goods or services received. But you don't have to reduce your deduction if you get a small item or other benefit of token value that the charity deems unsubstantial. In that case, you can deduct the entire amount you contributed.

The deduction for charitable contributions generally is limited to 50% of your adjusted gross income (AGI). The deduction for appreciated property is limited to 30% of your AGI if you choose to deduct the fair market value of the property or 50% if you choose to deduct the basis of the property.


  
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Laws on this topic may vary from state to state. This content is not meant to provide you with complete information and it is not intended to be legal or tax advice. It is recommended that you consult with your own attorney, accountant or other advisor regarding your specific situation.